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What you need to know about Uber, Lyft and other app-based car services

For the first time last month, I requested a car using a smartphone. The app correctly guessed my location using GPS, gave me a ballpark arrival time with a real-time map and even estimated the fare. A polite driver arrived on time and whisked me to my destination. When I tried to pay and tip, he explained that the payment was already taken (I'd receive a receipt by email soon) and that the service (Uber) forbade tipping.

Wait, what? No haggling, luggage fee, credit card refusal, time wasted on receipts or even tipping? This was an epiphany! But professional taxi drivers who pay thousands of dollars for a license are understandably not thrilled about these services. Neither are many cities (and regions) that collect those fees and say that Uber/Lyft/etc. are dangerous or improperly insured. The result of this clash, thus far, is chaos: bans, mass demonstrations and even violence. Despite all that, ridesharing poster child Uber was recently valued at $17 billion. So, will app-driven car services gain traction or be run out of town?

WHAT IS IT?

Uber and Lyft are the best-known services, but other players include Sidecar, Wingz, Summon and Hailo. In Europe, there's also LeCar, SnapCar, BlaBlaCar, Djump, Heetch and Carpooling.com. Uber has several slightly different services: It still operates its limo-style UberBLACK, which requires drivers to have a commercial chauffeur license and insurance. Taxis can now sign up for a service called UberTAXI with their existing permits and insurance. Finally, there's the pure ridesharing service UberX and an even cheaper version called UberPOP. For its part, Lyft, with its pink 'stache, is ridesharing-only, but recently announced Lyft Plus, a premium service it says is cheaper than competitive offerings.

Believe it or not, Sidecar and Lyft only launched two years ago. Uber arrived in 2009, but was just limos with apps until UberX launched in 2012. Oddly, the companies style themselves as "peer-to-peer transportation" platforms, not passenger services. So why the slippery terminology? We'll cover that soon, but it's largely about licensing, permits and insurance.

If you drive for Uber, Lyft or Sidecar, you don't need a commercial license. However, all the services require a clean driving record and Department of Motor Vehicles (DMV) check. They also perform a 10-year background check to ensure drivers have never been convicted of a violent crime, sexual offense or DUI (for example). Uber, Lyft, Sidecar and others also offer liability insurance for drivers, passengers and pedestrians for up to $1 million, but only if the driver's personal insurance doesn't cover an accident. Both Uber and Lyft now levy a $1 per-ride charge for insurance.

A driver who works for all three companies in San Francisco (let's call him "Jasper") told me that Lyft and Sidecar encourage drivers to be extra-smiley and friendly, complete with fist bumps. He added that Lyft tends to overdo it, however, and some drivers "don't drink the Kool-Aid" and aren't crazy about the "look-at-me" pink mustaches -- which aren't optional, by the way.

HOW DOES IT WORK?

Most ridesharing companies have a smartphone app that works on iOS and Android. You need to sign up and give your personal details, along with a credit card or PayPal account. When you're ready to find a ride, they all work about the same. You can input your location based on your GPS coordinates, and add your destination if you need a price estimate. With Sidecar, you must enter your destination when you order a car. Most will tell you how close the nearest ride is in minutes, and show the car arriving on a map. You'll also get the name of your driver, their overall rating (for Uber and Lyft, it's on a scale of one to five) and the type of car they're piloting.

The nearest driver is dispatched based on their GPS location, and just before they arrive, you'll receive a text message. "Jasper" told me that Uber's driver app won't transmit your destination to the driver, unlike Lyft's and Sidecar's apps. Instead, he has to enter it manually when the passenger arrives, so most Uber drivers pack a second phone or GPS. However, as mentioned, Sidecar customers must enter a destination, which drivers like as it gives them a close idea of their fare. He said that many of his customers avoid Sidecar for the same reason, though -- they'd rather not be bothered.

When I used UberX about a half dozen times on a recent trip to San Francisco, none of the drivers had a rating less than 4.7 out of five. However, the quality of vehicles varied. I rode in an older, not-very-fancy (but clean) Toyota Corolla and in a new, deluxe Honda Accord. Some drivers were very familiar with the city and drove me efficiently to my destination (I checked), but a few times, they overshot it or took a wrong turn. Incidentally, Uber drivers keep track of passenger ratings, too, but keep them under wraps to avoid confrontations -- a low enough passenger rating can get you kicked off the service. The only way to find out is to ask a driver, who may or may not reveal it. I was told that on all three services, if either you or your driver gives a rating of three out of five or less, you'll never be paired together again.

HOW MUCH DOES IT COST?

Once you arrive, the driver will stop the "meter" and that's it. You can just say "bye" and split because your fare has already been calculated and the payment taken automatically. Tipping isn't permitted on most services, though 20 percent is automatically added on UberTAXI (that can be changed globally). So how much does it cost? That depends, but the chart below for San Francisco -- the home base of Lyft, Uber and Sidecar -- offers a rough idea. Most of the services come in around 10 to 30 percent less than a regular taxi... with some huge caveats. Uber's infamous "surge" pricing, for instance, could make a trip much more expensive depending on demand, while Lyft's happy hour pricing could make it much cheaper (which aggravates some drivers). UberBLACK, XL and VAN services are higher, more in line with the price of a taxi or limo.

Sidecar allows drivers to select their own rates -- either lower or up to 1.25 times higher than the so-called community average (the company doesn't post those figures). That lets users pick a driver with a low fee or, say, a high rating. Jasper told me, however, that Sidecar offers drivers some other interesting options. For instance, during their own commute, drivers can lower their minimum rate drastically to ensure they have a fare, rather than riding empty. If a neighbor goes to work at the same time, for instance, the driver could give him a cheap ride every day -- a win-win deal.

How much commission ridesharing companies take is another interesting aspect. Jasper said that right now, Uber is charging a 20 percent commission, while Lyft is charging zero in San Francisco. (He added that fees seem to drop when companies get new rounds of funding.) In addition, drivers can be offered bonuses for recruiting other drivers -- Uber is reportedly offering up to $500 for new recruits right now.

WHAT'S AT STAKE?

It's hard to see the downside of ridesharing for passengers. The increased supply of cars makes it easier to find a ride, for one thing -- even if you prefer taxis. It also avoids the normal calling or wandering around to hail a cab, and gives you a status of your ride from the moment you request it. It's often cheaper than a cab, and there's rarely a dispute about unwanted fees or questionable route decisions. And the rating systems help keep drivers (and passengers) honest.

From a ridesharing driver's perspective, it's mostly all good, too. You'll never get stiffed on a fare, and the services generally shuffle cars around efficiently, minimizing downtime. The pre-registration process and automatic ride-logging also add a safety factor for both parties. Of course, most cab drivers would rather that ridesharing services go away. They see them as amateur interlopers who pay no hefty fees, but steal precious fares. As pointed out by The New Yorker, if peer-to-peer transportation companies continue on their current trajectory, they could put a lot of taxi drivers out of business. That would turn out to be bad for passengers in the end, too -- with less competition, fares would go up.

WHAT'S THE ARGUMENT?

A demonstrator kicks a car, suspected to be a private taxi, during a protest in Madrid, Spain.

The ridesharing issue has two loud camps -- which have literally come to blows in the past. Cab drivers call Lyft and Uber businesses-for-profit -- not "peer-to-peer transportation" -- and believe they should pay the same license fees and insurance as taxis. Cities, states and countries feel the same, in many cases. Uber started up in Vancouver in 2012, but was quickly shut down on the grounds that it was technically a limousine service and had to charge a minimum of $75 per trip. Similarly, it was barred in Virginia and is technically illegal in all of Belgium.

In addition, though Uber now does thorough background checks, it wasn't always so careful. Following an investigation by the Chicago Tribune, it had to apologize for hiring a driver with a felony conviction and was forced to redo thousands of driver screenings. Other black marks include an allegation of kidnapping against one Uber driver (the charge was dropped), and questions of insurance gaps for passengers. The new $1 fee for "passenger safety" and insurance addressed those issues, but one pundit noted that it was like paying a fee not to get assaulted.

On the other hand, taxis have a horrible reputation in many cities. According to the Washington Post, some 12,000 complaints were filed against cab drivers in Chicago through the city's Business Affairs and Consumer Protection fields, or around 33 per day. Among those, one passenger cited a driver that left him at the curb when the driver saw that he had a guide dog, while another cabbie refused a customer that wanted to pay with a credit card. Worse, many drivers have been cited for racist behavior or flat-out dangerous driving. Ridesharing services say their drivers would be banned at the first sign of such behavior, or weeded out by lousy customer ratings. They also say there wouldn't be a demand for their services in the first place if cab companies didn't mistreat customers so poorly.

WANT EVEN MORE?

The best way to find out if ridesharing services are for you? Grab one of the apps, sign up and give it a whirl. You'll find them by searching for Sidecar, Uber, Lyft, et al on the iOS and Google Play app stores. Unfortunately, none of the major players have official Windows Phone apps at the moment -- Uber did at one point, but the app was pulled. Uber also has a BlackBerry app. Lyft's, Uber's and Sidecar's blogs detail new city locations, service changes and other news. Uber also uses its blogs to discuss controversial topics, like the banning of cars in Brussels. You can check out the Washington Post's story about the litany of Chicago taxi complaints, the Daily Beast's argument against Uber's $1 "safety" fees and why ridesharing insurance headaches could get worse. Forbes' feature details the competition between Uber and Lift while GQ'sUber Cab Confessions touches on the industry's sordid side. Finally, we here at Engadget have covered Lyft, Uber and Sidecar closely since ridesharing became "a thing."

Update: Hailo reminded us that you "must be licensed by local regulators" to drive on its network. The article previously stated that no commercial license was required on Hailo. It has been updated with the correct information.